‘No Way to Secure Crypto,’ Top Analyst Says

In the light of the recent Coldcard hardware wallet compromise, BlockTower Capital founder Ari Paul has argued that the incident demonstrates there is “simply no way to secure crypto.”

Paul’s comments came after reports that a firmware flaw affecting multiple generations of Coldcard hardware wallets enabled an attacker to steal roughly 1,082.65 BTC (roughly $70.2 million at the time) in just 41 minutes.

On X, entrepreneur Jonathan Goodman revealed that $1.6 million worth of Bitcoin had been stolen from his Coldcard wallet. “My Bitcoin was in cold storage. My keys were on a ColdCard device kept in a safety deposit box that had never been connected to the internet,” Goodman wrote on X.

Crypto’s biggest weakness

Paul argued that the Coldcard compromise exposed an uncomfortable reality that has always existed.

“The Coldcard compromise is being somewhat shrugged off, correctly, since it revealed nothing new,” he wrote. “But what it reminded us of is that there is simply no way to secure crypto.”

According to Paul, neither self-custody nor third-party custody offers complete protection.

“If you custody it with Coinbase or another custodian, they’re frequently hacked, and you get no compensation. Custody it yourself, perfectly, and you may lose it to coldcard-like compromises,” he said.

According to Paul, the same fundamental vulnerabilities extend beyond a single hardware wallet manufacturer because every custody solution ultimately depends on hardware and software that could have vulnerabilities.

“The sad reality is that the legal system remains a far more reliable safeguard of financial assets than cryptography today in most of the developed world,” Paul stated.

He noted, however, that crypto may still represent a stronger alternative in countries where legal institutions and property rights are less dependable.

Erik Voorhees defends self-custody

In response to Paul’s rather cynical take, ShapeShift founder Erik Voorhees argued that the Coldcard incident does not prove cryptocurrencies cannot be secured. However, he concedes that there is no single storage system that is perfectly risk-free.

He argued that every method of storing wealth involves different tradeoffs rather than identical risks.

He has also noted that hundreds of billions of dollars worth of crypto have been stored securely for years.